Employers Choose Bonuses Over Raises

Employers are boosting benefits—including bonuses and vacation time—at a faster pace than salaries, reports the Wall Street Journal (18 September, Chen, Morath). The cost of benefits for private-sector employers rose 3 percent in June from a year earlier, while the cost of wages and salaries advanced 2.7 percent, according to the U.S. Department of Labor. The benefit gain was driven by a nearly 12 percent increase in bonuses and other forms of supplemental pay. Paid leave, including vacation time, rose 4 percent in June from a year earlier. The trend extends a long-running but slow shift in compensation toward benefits and away from baseline salaries. The increase in bonus compensation in part reflects lump-sum payments that many large companies gave employees after Congress approved a package of tax cuts late last year. "Bonuses and supplemental pay speak to labor market conditions, and workers are in a good spot to get a little more," said Ryan Sutton, a district president for Robert Half. "Companies are still reluctant to move base wages up too much. It's a lot harder to take that away than bonuses."